The Return of Gold?

by Michael J. Howell1. March 2017 11:57

We have long-held a bullish view of the gold bullion price, setting a long-term target of US$3,200/oz. (see Global View “Rising Oil and Rising Gold” March 2011). This figure represents the value required to keep the monetary value of the gold stock in line with the vast accumulation of paper debt. The target was never likely to be a straight-line prediction, but the monetary rollercoaster witnessed over recent years is testimony to the uncertainties of Central Bank policies and the associated fragility in credit markets. This report argues two things: first that the two monetary drivers of the gold price are now much better aligned to support a further near-term rally and second that the future trend towards higher gold prices will be set by the monetary consequences of key geo-political change involving the US and China. We reiterate our view that gold and commodities will be star performers in 2017.

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